SEBI Chairman Warns Against Manipulating New Closing Auction Session

The Securities and Exchange Board of India (SEBI) is defending its new Closing Auction Session (CAS) for futures and options eligible stocks following concerns from market participants regarding losses and reduced participation. Implemented on August 3, the CAS ends continuous trading for these stocks at 3:15 pm, using a matching auction to determine the official closing price based on maximum executable volume. This replaces the previous 30-minute Volume Weighted Average Price (VWAP) system.

Chairman Tuhin Kanta Pandey stated that the regulator is analyzing social media discussions, expiry-date data, and participant concerns to determine if improvements are necessary. While acknowledging that participants are still adapting to the system, Pandey confirmed that SEBI has found no concerns regarding tracking errors and asserted that the mechanism is "here to stay."

Speaking at the FICCI Capital Markets Conference in Mumbai on August 19, Pandey issued a warning that the regulator will take immediate and strict action against any attempts to manipulate or defame the system. He argued that the CAS provides greater capability to detect manipulation than the old VWAP system and is intended to increase transparency and execution efficiency for large orders.